Filenews 19 January 2025 - by Eleftheria Paizanou
What has been happening in recent weeks in relation to the debts of millions of football clubs to the state, as well as the tolerance shown by governments over time, giving them immunity through debt cancellation and the granting of various favorable repayment plans, bring back to the fore the overall burning issue of uncollected state revenues.
In the past there have been many interventions by the Audit Office in its annual reports in relation to debt recovery practices. Both the Tax Department and the Social Security Services have at their disposal various tools to collect their receipts, but in some cases these do not prove enough to address the problem.
In some cases, the amounts due will clearly never be recovered, as debtors are either deceased, do not have enough assets that can be liquidated, or are bankrupt individuals and companies that have been wound up.
Accumulated debts
The Department of Taxation and Social Insurance have the most uncollected revenue. In the case of the Tax Department, in 2023 the amount of debt immediately due before collection measures were carried out was €2.6 billion, including interest and charges, compared to the corresponding amount of €1.8 billion. in December 2022.
Total taxes under collection measures in 2023 were €726.7 million compared to €757.9 million in 2022. The net amount of taxes due before the implementation of the bank account seizure measure last year was €1.7 billion, compared to €1 billion. which was in 2022. The net immediately payable amount of tax without collection measures on 31/12/2023 amounted to €1.7 billion.
The measures of the Department of Taxation
Executive and legislative powers have given some tools to the Tax Department for the state to collect its receipts, but others are needed to strengthen its tax collection capacity.
- Since 2014, the Tax Department has the ability to place a MEMO on taxpayers' real estate and freeze their bank accounts when they do not comply with their tax obligations.
- Another measure applied is criminal prosecutions for non-payment of taxes. Criminal prosecutions are made for failure to pay withheld taxes (VAT, Pay as you Earn, Special Contribution for Defence (EEA) and for failure to submit tax returns. At the same time, at regular intervals the special Unit for Debt Management and Debt Collection, in cooperation with the district tax offices, strengthen controls for the collection of debts. When debtors are prosecuted, They are taken to court. For criminal cases, either a penalty is imposed during the trial and settlement of payment, or an out-of-court settlement takes place at the same time as compliance (submission of declarations and/or creation of a timetable).
MEMO and seizures
According to official data, in 2023 the Tax Department placed a MEMO on the properties of 5,841 taxpayers, who had tax debts for direct taxation and VAT amounting to €647.6 million.
Of the 5,841 taxpayers to whom their property was frozen in 2023, 451 taxpayers subsequently withdrew the MEMO, while another 40 persons were written off part of their VAT debts, amounting to €1.3 million.
During the same period, the Tax Department also seized bank accounts amounting to €141,000, belonging to 225 taxpayers. At the same time, 1,156 taxpayers were prosecuted for non-compliance with their tax obligations. There were 528 new criminal charges filed in 2023 for failing to file tax returns, while 383 from previous years are pending.
At the same time, 628 new criminal prosecutions have been registered in VAT cases. Of the criminal charges of previous years, 1,093 are pending.
According to data from the Tax Department, from the criminal prosecutions that were completed, an amount of €8.8 million came to the state coffers. In addition, from the settlements and timelines set by the Department, €1.6 million has been collected.
He wants more tools
In addition to the above "weapons" at the disposal of the Tax Department, it should be strengthened with further measures to increase the effectiveness of its actions against those who do not comply with the law and do not repay their tax debts.
- Among other things, the Department has at times demanded the criminalization of non-payment of income tax. This is a painful subject. In the past, the Ministry of Finance also submitted a relevant bill, but this provision was withdrawn after strong reactions from various bodies.
After a few years, the previous government had announced that the measure would be reinstated, but this has not yet happened.
It is not clear whether such a measure will be included in the tax reform being promoted. - Another tool that would strengthen the department's efforts is the placement of liens on movable property, as applied in other countries. It will involve the freezing of shares in various companies.
- Another measure is to speed up court proceedings, which are delayed.
- In addition, despite the requests submitted by the Department of Taxation from time to time to the Technical Committee on Write-Offs for the cancellation of debts of taxpayers, from whom debts cannot be collected, most of the time the Committee does not consent. This committee includes representatives of the Treasury, the Audit Office and the Ministry of Finance. In 2023, 66 cases of taxpayers who died were sent for debt write-offs to the Technical Committee for Write-offs (SDF) with a total debt amount of €66 thousand.
The forgotten bill to strengthen Social Insurance
A few years ago, a bill was submitted to Parliament that provides the Director of Social Insurance Services with the same powers that the Commissioner of Taxation has today to claim debts, such as the registration of a lien on immovable property, the well-known memo, but also the possibility of freezing and seizing deposits.
However, the discussion of the bill was suspended, as it was considered that the required social dialogue had not taken place. This bill was also the subject of discussion in the Social Security Council, where some reservations had been expressed. The bill has been in the drawers of the Labor Committee since March 2019. According to the Commission's pending list, the purpose of the bill is to introduce regulations for the attachment and sale of movable property before and after the commencement of criminal proceedings before a court and for the acceptance and registration of a lien on the debtor's immovable property. Despite the change of government in 2023, there has been no request to withdraw this bill.
In the coming days, the chairman of the parliamentary Labour Committee, Andreas Kafkalias, is expected to forward a letter to the Minister of Labour Yiannis Panayiotou, requesting information on the further intentions of the Government in relation to the government bill. In particular, he will ask whether the reservations that existed on the bill have been lifted and whether the Government wishes to continue its discussion in committee or whether it will withdraw it.
Criminal prosecutions by Social Insurance
For their part, the Social Insurance Services can prosecute those who do not pay contributions to the Social Insurance Fund. Under the law, any employer or self-employed person who fails to pay any contribution or additional fee is guilty of an offence and, if convicted, is liable to imprisonment not exceeding one year or to a fine not exceeding €3,400. Also, in case of repetition of the offense, the prison sentence rises to two years and the fine to €5 thousand. All sums due to the Fund may be claimed as debts owed to the Republic and, without excluding any other measure, may be the subject of a civil action brought by the Director as a contractual debt.
